|
|
||
| Comparing Orbitz & Travelocity | |||
| Travel agencies for decades have paid for services provided by computerized reservation systems. Sabre Holdings, the nation's largest such system, owns 96 percent of Travelocity. Orbitz executives bill their company as an alternative to Travelocity and Expedia, which receive compensation from airlines that are similar to commissions long imposed by brick-and-mortar travel agencies. The airlines pay $15 to $17 in booking fees to the reservation systems for each ticket sold--about $1.7 billion a year for all airlines in the United States. With Orbitz, the airlines get some of the booking fees back in the form of rebates thus cutting their transaction costs by 30 percent, or $10.50 to $12 per ticket. The airlines then pass some of the savings to consumers. | |
|
Orbitz lists fares by price or time, but it may not include fares of airlines that don't participate in its program, such as Southwest and JetBlue Airways. Orbitz charges a $5 service fee on all fares. Last week, it began charging an additional $5 fee on fares from America West and Air Canada when those companies stopped paying Orbitz a commission fee. Since then, Air Canada has reached an agreement with Orbitz and the fee has been lifted. It's difficult to determine which company offers the best deals. Few independent studies benchmark speed and price. On a given day, any of the sites could have the cheapest fare--or the cheapest fare could come from nonmember airlines such as Southwest. Another factor is convenience. Orbitz often finds the cheapest ticket, but it doesn't consider frequent flier affiliation or other preferences. Passengers who buy through Orbitz can't reserve a seat online--a feature that Travelocity hasoffered for more than a year. Although it's unclear how consumers will fare, travel industry veterans say the biggest losers will be small to midsized travel companies--those that don't specialize in cruises or other niches and can't compete on price. Expedia and Travelocity promote rental cars, hotels, cruises and packages, but roughly 90 percent of revenue in the leisure business comes from airline tickets. |
|
|
|
|
| © 2003-2004 InfoBert.com All Rights Reserved. |